Appellate Tribunal For Electricity
Sahu Hydro Power Pvt. Ltd vs Himachal Pradesh Regulatory ... on 6 January, 2026
Judgement in Appeal No. 401 of 2018
IN THE APPELLATE TRIBUNAL FOR ELECTRICITY
(Appellate Jurisdiction)
APPEAL NO. 401 OF 2018
Dated: 06.01.2026
Present: Hon'ble Mrs. Seema Gupta, Technical Member (Electricity)
Hon'ble Mr. Virender Bhat, Judicial Member
IN THE MATTER OF:
Sahu Hydro Power Pvt. Ltd.,
Opposite Ashwani & Rajneesh Hardware Shop,
VPO Sarol Tehsil & Distt.
Chamba - 176310,
Himachal Pradesh ... Appellant
Versus
1. Himachal Pradesh Regulatory Commission,
Through its Chairman,
Vidyut Aayog Bhawan, Black No.-37,
SDA Complex, Kasumpti,
Shimla - 171009,
Himachal Pradesh.
2. Himachal Pradsh Power Transmission Corp. Ltd.
Through its Managing Director,
Himfield Building,
Old MLA Quarter,
Shimla - 171005,
Himachal Pradesh
3. Himachal Pradesh State Electricity Board Ltd.,
Through its Executive Director (Personnel),
Page 1 of 34
Judgement in Appeal No. 401 of 2018
Kumar House,
Shimla-171004,
Hilachal Pradesh ... Respondents
Counsel for the Appellant(s) : Ms. Sumiti Yadava
Mr. Piyush Joshi
Counsel for the Respondent(s) : Mr. Pradeep Misra for Res.1
Mr. Anand K. Ganesan
Ms. Swapna Seshadri
Ms. Neha Garg
Ms. Ashwin Ramanathan for Res.2
Mr. Ajay Marwah for Res.3
JUDGEMENT
PER HON'BLE MRS. SEEMA GUPTA, TECHNICAL MEMBER (ELECTRICITY)
1. This Appeal is filed by Sahu Hydro Power Private Limited under Section 111 of the Electricity Act, 2003, against the order dated 15.09.2018 of the Himachal Pradesh Electricity Regulatory Commission ("Impugned Order") dismissing Petition No. 52/2017 seeking compensation for generation loss caused to it by the default of the respondents.
2. The Appellant, M/s Sahu Hydro Power Pvt. Ltd. is engaged in the generation of electricity and has set up its Small Hydro Electric Project at Kurtha located in District Chamba, Himachal Pradesh with an installed capacity of 5 MW (2 X 2.5 MW).
Page 2 of 34Judgement in Appeal No. 401 of 2018
3. Respondent No.1 is Himachal Pradesh Electricity Regulatory Commission (hereinafter referred as "State Commission/ HPERC"), which regulates the Himachal Pradesh's electricity sector to ensure safe, affordable, and reliable power delivery. Respondent No.2 is Himachal Pradesh Power Transmission Corpon. Ltd. ("HPPTCL"), engaged in intra-state Transmission of electricity. Respondent No.3 is Himachal Pradesh State Electricity Board Ltd ("HPSEB").
Factual matrix of the Case in brief:
4. Appellant Company signed a Memorandum of Understanding (MoU) on 06.06.2007 with the Government of Himachal Pradesh for setting up a Small Hydro Project at Kurtha (hereinafter referred as "Kurtha SHEP") located in District Chamba and thereafter submitted the detailed project report to the Government of Himachal Pradesh. On 24.05.2010, Respondent No.3 i.e. HPSEB, the competent authority for the purpose, accorded Techno-Economic Clearance to Kurtha Small Hydro Project 5 MW (2 x 2500 KW) allotted to Appellant.
5. On 08.05.2013, the Appellant applied to Respondent No.2- HPPTCL for grant of Grid connectivity for its Kurtha SHEP (5MW), and HPPTCL vide its letter dated 18.6.2013 sent Intimation for grant of Grid Connectivity from Karian 33/220 kV Sub- Station and on 12.03.2014, Connection Agreement was executed between HPPTCL and the Appellant.
6. As per agreement with HPSEB, Kurtha SHEP (5MW) was scheduled to be synchronized with the grid on 15.05.2014 with its scheduled date of commercial operation as 30.05.2014, however it has been submitted by Appellant that due to non-availability of evacuation facility to be provided by Respondent No. 2-HPPTCL, the project could not be commissioned within due date and the Appellant Page 3 of 34 Judgement in Appeal No. 401 of 2018 approached Respondent No.3-HPSEB for providing evacuation facility to the Kurtha SHEP at the Gharola Feeder of HPSEB located in near vicinity of Karian 33/220 kV Sub-Station till the commissioning of Karian sub-station by HPPTCL. Appellant also made representation to the State Govt that its Kurtha SHEP is ready, however in the absence of evacuation facilities of HPPTCL same is not being evacuated.
7. On 12.09.2014, HPPTCL informed the Appellant that the work of 33/220 kV substation at Karian in District Chamba had been completed and work on 220 KV transmission line from Karian to Rajera PGCIL was under progress and likely to be completed shortly. The Appellant was asked to apply for connectivity/open access within one month time from the date of issuance of the letter failing which the capacity allocated for evacuation of power from (5MW) Kuril HEP would be de- allocated and assigned to another applicant.
8. HPSEB, on 25.09.2014 informed HPPTCL that Kurtha SHEP has been allowed to evacuate power through 33 kV Chamba- Gharola line as an interim arrangement till commissioning of 33/200 kV substation by HPPTCL. Appellant Vide its letters dated 31.10.2014/27.11.2014, to HPPTCL submitted that in view of completion of work of LILO of 33 kV Gharola Feeder at the 33kV side of Kurian sub- station, Appellant has made arrangements to connect its Kurtha 33kV DC line to 33 kV Kurian substation and sought HPPTCL permission to grant access to the Appellant to evacuate power from its Kurtha SHEP to Gharola feeder to Respondent No.3 so as to start commercial operation in stipulated time. On 01.12.2014, HPPTCL informed the Appellant to deposit the cost of two number 33 kV bays (Rs. 1,87,82,600/-) immediately before interfacing the power of Kurtha (5 MW) SHEP in 33/220 KV pooling sub-station at Karian.
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9. The Appellant executed an Interim Power Purchase Agreement with Respondent No.3 - HPSEB in respect of Kurtha SHEP 5 MW on 11.12.2014. The Kurtha SHEP (5MW) was synchronized with the grid and declared successfully commissioned w.e.f. 30.12.2014. A Supplementary Power Purchase Agreement and Power Purchase Agreement was executed between the Appellant and Respondent No.3- HPSEB on 11.05.2015 and on 27.11.2015.
10. Appellant, vide its letter dated 29.06.2016/25.07.2016 made a representation to the HPPTCL that the Kurtha SHEP was under load restrictions and is subject to local grid limitations as per interim arrangement and therefore loosing heavily on revenue due to generation loss along with royalty to Government of Himachal Pradesh. Appellant claimed compensation for the losses caused to it due to the defaults of Respondent No. 2-HPPTCL and requested it to expedite commissioning of the sub-station at Karian. On 25.07.2016, the Appellant Company sent another reminder to HPPTCL regarding its claim for compensation.
11. The HPPTCL vide its letter dated 16.08.2016 to Special Secretary (Power), Government of Himachal Pradesh informed that the transmission line from Karian to Rajera was still under construction and will be commissioned by March 2017 and also informed that Appellant has not signed an agreement for open access, and upon signing of such agreement it will be provided with facilities to evacuate power. In response, Appellant vide letter dated 27.08.2016 informed the HPPTCL that it has signed long term PPA with the Respondent No.3 and as such the agreement for open access is not applicable and the Appellant Company has already executed the Connection Agreement on 12.03.2014 with the Respondent No.2.
12. The Appellant vide letter dated 03.02.2017 claimed generation loss w.e.f. 30.12.2014 i.e. commercial operation date of the project till January, 2017 to the Page 5 of 34 Judgement in Appeal No. 401 of 2018 tune of Rs. 9,60,20,471/- and requested to expedite the commissioning of its 33/220 kV Karian sub-Station located in Distt. Chamba, so that power generation loss may be avoided in future.
13. Subsequently, Appellant filed a petition on 12.05.2017 before HPERC/ State Commission for adjudication of dispute inter-se the parties with regard to payment of compensation by HPPTCL on account of generation loss for the period from 01.06.2014 to 30.09.2017. In pursuance to the interim order dated 25.11.2017, passed by the State Commission, Appellant on 24.06.2017 revised the claims for compensation from Rs. 21,23,67,895/- (stated in its petition dated 12.05.2017) to Rs. 12,23,98,345/- on account of generation loss for the period from 01.06.2014 to 30.09.2017 against HPPTCL.
14. The State Commission passed the final order on 15.09.2018 and held that the claim raised by the Appellant on account of compensation for loss of generation is not sustainable, however this shall not in any way undermine the necessity of completion of the various ongoing transmission works by HPTCL/STU in a time bound and expeditious manner so that the incidents of loss of generation are avoided. Aggrieved by the Order of State Commission, Appellant has filed present Appeal before this Tribunal.
Submission urged on behalf of Appellant
15. Kurtha SHEP was ready for generation of power as on 30.05.2014, i.e., the scheduled CoD of the plant, however in the absence of Karian 33/200 kV substation, after lot of persuasions and follow up at all level, interim evacuation arrangement was provided and Kurtha SHEP declared successfully commissioned on 30.12.2014. HPPTCL's Karian sub-station was charged only on 12.05.2018 and Page 6 of 34 Judgement in Appeal No. 401 of 2018 physical interconnection to the Appellant was provided only on 05.06.2018. The Appellant is aggrieved by the finding in the Impugned order that there was no obligation on the part of Respondent No. 2 for compensating the Appellant, as there was no separate agreement for indemnification entered into as purportedly contemplated by Recital D; same is erroneous and unsustainable as Recital D of the Connectivity Agreement does not contemplate any further agreement being signed in addition to the Connection Agreement as far as stipulation of timelines and consequences for delay were concerned. The Connectivity Regulations and the Connectivity Procedure also did not contemplate any separate agreement to this effect being signed between the parties. It is a settled law that contracts have to be construed so as to provide commercial efficacy and sub serve public interest, as held by the Supreme Court in "Indsil Hydro Power and Manganese Limited vs. State of Kerala and Ors".; (2020) 16 SCC 276) ("Indsil Judgement").
16. The reference in Recital D is only for separately taking up implementation of the works on mutually agreed terms and conditions. The Connection Agreement and the documents referred to in Clause 1.2 of the said Agreement are the mutually agreed terms and conditions and wherever there is no such mutually agreed term and condition, the Connectivity Regulations and Connectivity Procedure would apply. It is only the pricing on the basis of which compensation is to be calculated which remained to be determined by parties on mutual agreement. If that mutual agreement is not reached, then obviously, the dispute resolution mechanism under the contract and the Electricity Act, 2003 would come into play. The quantum of compensation shall be as per the actual loss suffered by the Appellant against the non-completion of work and failure to provide the evacuation facility by Respondent No. 2; a reasonable price per unit of lost production during the period of delay would be the compensation. This could never be read as the requirement of another agreement being signed between the parties.
Page 7 of 34Judgement in Appeal No. 401 of 2018
17. The Connection Agreement is not an agreement to agree and therefore, cannot be interpreted to be imposing obligations different from the main provisions of the agreement and be taken to impose a substantive provision to agree to another agreement to make its obligations effective. Wherever the parties intended to provide for a separate agreement, the same was specifically and expressly provided for in the Connection Agreement. Even in the absence of a separate indemnification agreement, the Appellant was eligible to be compensated for the losses caused to it by the acts and omissions of Respondent No. 2 as it is a settled principle of contract law that a party who breaches its obligations under a contract is liable to compensate the other party for the losses caused due to such breach.
18. If one is to proceed on the basis that the Connectivity Regulations and Connectivity Procedure did not specify a timeline for completion of the work by Respondent No. 2, such regulatory failure of State Commission and consequence of that cannot be visited on Appellant. In the absence of any specific time for commissioning of the Karian sub-station, the HPPTCL ought to have completed the commissioning of the sub-station within a reasonable period of time. The Supreme Court, in Indsil Judgement has also crystalized that CoD of IPP and grant of evacuation facilities by transmission licensee have to be synchronized so that no loss is caused to IPP and states that even if the transmission licensee is not really to be blamed for the delay in laying its own transmission infrastructure, even in such a situation, the IPP cannot be left without a remedy as that would be anathema to rule of law. The Indsil judgment squarely governs the present case.
19. It is further submitted that Principles of Indian Contract Act, 1872, would apply to govern consequences of breach and the consequent compensation as recognised by the Hon'ble Supreme Court in "Kerala SEB v. Kurien E. Kalathil";
Page 8 of 34Judgement in Appeal No. 401 of 2018 (2000) 6 SCC 293 and "Special Officer, Amaravati Co-operative Sugar Mills, Krishnapuram, Coimbatore District v. D.V. Thirumalaiswamy & Ors."; 1970 SCC OnLine Mad 78.
20. In fact, the State Commission in 2021 Amendments to the Connectivity Regulations, in regulation 8(5) has specified that the connection agreement shall have detailed provisions on, inter-alia, the consequences of delay in meeting the timelines by the respective parties to the agreement, is synchronous with and merely explanatory/clarificatory of extant and governing principles of Indian Contract Act, 1872. No new right or obligation was created by the 2021 Amendment to the Connectivity Regulations but merely an existing position under law was further crystalized by expressly stipulating what all further should be contained in the Connectivity Agreement. The amendment was introduced solely to remove ambiguity and provide clarity in the connectivity framework. Therefore, the 2021 amendment to the HPERC (Grant of Connectivity, Long-Term Medium-Term Intra State Open Access and Related Matters), 2010, operate retrospectively and consequently, cover the Appellant's case in the present appeal. ("Zile Singh v. State of Haryana, (2004) 8 SCC 1).
21. Various minutes of meetings of the STU Coordination Committee from 24.01.2014 till 06.01.2016 clearly show that the delay in providing the interconnection was solely attributable to HPPTCL and certainly not to the Appellant.
22. With regard to the plea taken by HPPTCL that Appellant did not provide a PERT Chart and therefore there was no agreed time frame for discharge of obligations by HPPTCL, is merely a red herring, and ought not to have been considered at all by the HPERC. HPPTCL was always aware of the imminent and Page 9 of 34 Judgement in Appeal No. 401 of 2018 actual attainment of COD of the Appellant's Kurtha SHEP. The Appellant and the HPPTCL signed the Connection Agreement dated 12.03.2014 and signed copy of the said agreement was shared by HPPTCL with the Appellant on 13.03.2014; HPPTCL never indicated any deficiency in the Appellant's application for grant of connectivity such as non-submission of PERT Chart. In any event, the PERT Chart was only one of the many documents that indicated the date of scheduled date of commissioning. The Appellant's claim of compensation cannot be denied, merely by refusing to consider the PERT Chart submitted by the Appellant to the HPPTCL and refusing to consider the other contemporaneous communications indicating the CoD of Kurtha SHEP.
23. This Tribunal in " Greenko Budhil Hydro Power Private Limited v. UERC"
Appeal No. 100 of 2017 ("Greenko Judgement") has held that regulators are required to conduct prudence checks and examine all the attendant facts and circumstances and not merely limit themselves to an inquiry based on a PERT Chart.
24. With respect to the payment of bay charges, which was demanded in December 2014 by the HPPTCL and paid by the Appellant in March 2018, learned Counsel submitted that the State Commission has wrongly held that the Appellant defaulted in payment of the said charges and that on account of this purported default, it's conduct precluded it from claiming any compensation. Even if the Appellant had made the payment in December 2014, it is clear from the record that the HPPTCL would not have been able to provide inter-connection facility any time soon thereafter; the same was provided only in May 2018. The Appellant vide its communication dated 02.12.2014 has clearly stated to the HPPTCL that it was seeking to defer the demand of payment of bay charges dated 01.12.2014, only on account of inordinate delay by HPPTCL to commission the Karian sub-station and Page 10 of 34 Judgement in Appeal No. 401 of 2018 the financial constraints imposed on the Appellant in having to complete work on its own transmission lines even though physical connectivity with Respondent No. 2 network was severely delayed and due to the interim evacuation measures having to be taken.
25. It is further submitted that the State Commission has wrongly relied on Reg. 5(5) of the HPERC (Promotion of Generation from the Renewable Energy Sources and Terms and Conditions for Tariff Determination) Regulations, 2012 ("Tariff Regulations 2012"), to hold that the interconnection facilities would have been provided only after the payment of the bay charges. These Tariff Regulation are not applicable to the present. Appellant's case squarely meets the exclusion laid down in Reg. 3(2)(i), since the Appellant had already entered into an interim PPA with HPSEB on 11.12.2014 and a PPA with the HPSEB dated 27.11.2015 which provided the tariff for net saleable energy and approved by HPERC; further, the installed capacity of the Kurtha SHEP was already fixed at 5MW and was not increased any further after signing of the PPA.
26. Assuming, without admitting, even if the extant Reg. 5(5) of Tariff Regulations were applicable to the present appeal, they stipulate that the licensee shall provide interconnection facilities, after receipt of the estimated cost of such facilities, "within such period of time as may be mutually agreed keeping in view of the timeframe in which the sub-station is to be commissioned." The time frame within which the sub- station is to be commissioned was not even inquired into by the State Commission; and it has proceeded as if these issues were left open ended or un-determined whereas at all material times, Respondent No. 2 has rightly proceeded on basis that 'time period for providing physical interconnectivity shall be as per the terms and conditions stipulated in the procedure for grant of connectivity.
Page 11 of 34Judgement in Appeal No. 401 of 2018
27. Regarding the contention of HPPTCL that the Connectivity Procedure stipulated a minimum period of 2 years for granting physical connectivity, it is submitted that same is a mis-reading of the relevant provisions. The Note 1 in Format Connectivity 3, talks about furnishing information in Format Connectivity 4 to STU at least two years prior to physical connectivity, the same Note further says that the Applicants are however advised to furnish such details as early as possible. Thus, the two years period is not at all a minimum time line prescription as sought to be argued by HPPTCL. Moreover, it is a matter of record that while Format Connectivity 3 letter was issued by HPPTCL to Appellant on 18.06.2013 the Appellant furnished the required information in Format Connectivity 4 on 10.01.2014 within 7 months, wherein it was clearly stipulated by Appellant that it would be able to attain CoD on 31st March 2014. The delay in providing interconnection was solely due to HPPTCL's failure to commission the Karian sub-station until May 2018. The Appellant is, therefore, entitled to compensation for losses suffered due to alternate evacuation arrangements and load restrictions and the Appellant is claiming following compensation:
(i) Generation losses caused by HPPTCL w.e.f. 01.06.2014 to 30.09.2017 - Rs.
11,68,96,498/-, along with interest @ 18% from due date till its actual realization;
(ii) Investment on construction of temporary Sub-station with Circuit Breaker and related protection equipment at Karian near HPSEB Sub-station - Rs. 37,51,847/-
(iii) Rs. 17,50,000/- for Idle Salary & Wages of Staff from 01.06.2014 to 30.12.2014 Page 12 of 34 Judgement in Appeal No. 401 of 2018 SUBMISSIONS URGED ON BEHALF OF RESPONDENT - HPPTCL
28. It is submitted that the HPPTCL is a statutory body, being the State Transmission utility, for the State of Himachal Pradesh and discharges the functions in relation to intra-state transmission of electricity as specified under the Electricity Act, 2003. As a part of the overall system development in the State of Himachal Pradesh, HPPTCL had planned augmentation of 33/220 kV Karian Sub-station located at District Chamba in the State. Appellant, in the 'Application for Grant of Connectivity, Format-2' had indicated the date of connectivity required as 31.10.2013, and same did not pertain to the grant of physical connectivity. In the procedure for processing of the above, it is clearly mentioned that the details for physical connectivity will be furnished at least 2 years prior, unless specifically indicated otherwise and it will be as per the terms and conditions of the procedure for grant of connectivity (which includes the Connection Agreement). The connection agreement does not even deal with physical connectivity but only reservation of capacity for connectivity, so that the capacity is thereafter not allotted to a different person.
29. In the grant of connectivity dated 01.02.2014, the date of commercial operation for the transmission system is mentioned as "As per HPERC Regulations & subsequent procedure for making application for grant of connectivity/LTA in IaSTS after signing of LTA/BPTA." Parties executed the Connection Agreement on 12.03.2014 as required under Regulation 5 of the HPERC Open Access Regulations, which delineates the rights and obligations of the parties.
30. Quite apart from the fact that there are no timelines provided for either the generator or the transmission system, Recital D specifically provides that the parties shall separately agree to a PERT Chart, timelines and terms of indemnification and loss valuation, financial penalties for non-execution of works as per timelines Page 13 of 34 Judgement in Appeal No. 401 of 2018 resulting in losses etc. Recital D itself establishes, as it is does not contain any timeline or compensation for non-execution as per timelines, that a separate agreement including the PERT chart was to be agreed upon. This being the specific term of the agreement, it is now not open to the Appellant to content that even when there was no separate agreement entered into, the timelines, PERT Chart, terms of indemnification, loss valuation, etc. ought to be read into the existing agreement, Such an interpretation would in fact render Recital D redundant and otiose.
31. The HPPTCL, as the STU and a statutory body, cannot be imposed with terms which are not even agreed upon. There cannot be any unilateral term of the agreement sought to be introduced by one party. It is incomprehensible that the STU which at the relevant time (FY 2014-FY 2018) had total ARR of only about Rs. 32.56 crores, and which is prohibited from purchasing electricity, would be put to risk of deemed generation of amounts much higher that even its total ARR. It is now well settled law that Regulatory Commissions are required to adjudicate upon disputes between the parties strictly within the four corners of the agreement, and not based on any notions of equity, etc, as noted in"Chamundeshwari Electricity Supply Company Ltd. (CESC) v. Saisudhir Energy (Chitradurga) Pvt. Ltd. & Anr.", 2025 SCC OnLine SC 1816 (Para 43).
32. The reliance placed by the Appellant on Section 73 of the Indian Contract Act, 1872 is wholly misplaced. For Section 73 to apply, there must first be a breach of the agreement. In the present case, in the absence of any agreed timelines binding on the parties, no question of breach arises. Similarly, Section 46 of the Contract Act, 1872 is equally misplaced, as it applies only where performance is to be rendered without any application or demand by the promisee, whereas the interconnection works were to be executed on a deposit work basis, with the costs payable by the Appellant. Furthermore, Recital D expressly states that the timeline Page 14 of 34 Judgement in Appeal No. 401 of 2018 would have to be separately agreed upon, which itself makes Section 46 inapplicable.
33. The Appellant has sought to rely on the Open Access (Amendment) Regulations, 2021, contending that timelines should be provided in the Connection Agreement as the Regulations are retrospective and clarificatory, is misconceived. Regulations which impose substantive provisions, conditions or obligations are always only prospective. The decision of the Hon'ble Supreme Court in "Zile Singh v. State of Haryana", (2004) 8 SCC 1, in fact, supports the case of HPPTCL.
34. The reliance on "Indsil Hydro Power v State of Kerala", (2020) 16 SCC 276 is misplaced. The decision was on a Power Purchase Agreement, wherein the purchasing entity, KSEB was to build the line itself and take power from a particular date (30 months), thereby creating an implicit reciprocal obligation. Further, compensation for deemed generation was in fact rejected holding that there was a policy issue to be decided. In the present case, HPPTCL is not a purchaser of electricity having any reciprocal obligation to purchase electricity from a particular date. In fact, the date of commissioning of the generator is not even provided in the Agreement or the grant for any such implied term.
35. It is asserted that there is no PERT Chart or timeline in the Grant of Approval dated 01.02.2014 or the Connection Agreement dated 12.03.2014, the physical connectivity was itself envisaged with at least 2 years prior notification, the Transmission Services Agreement for use of the line itself was only in the year 2018 and the Appellant itself complied with the Regulations for construction of interconnection bays only in 2018 after which physical connectivity is to be provided. The reliance on the STU Meetings by the Appellant in the present case is misplaced, as such meetings are convened under Section 39 of the Act, for overall Page 15 of 34 Judgement in Appeal No. 401 of 2018 development of the system, and not under a particular contract. Contractual obligations cannot be imposed based on the minutes of the transmission coordination meeting for the whole State
36. It is further submitted that the entire basis of the claim before the State Commission as well as before this Tribunal is that there was an agreed PERT Chart, however this contention is factually misleading, and erroneous. The PERT chart sought to be produced is unilateral and not even signed by HPPTCL and cannot be considered to be an agreement between the parties. The said PERT Chart, in fact does not even deal with the timelines of HPPTCL, but only with that of the Appellant. In response toa specific query by this Tribunal, the Appellant in the affidavit filed on 11.04.2025 admitted that the person dealing with the subject matter at that stage and who signed the connection agreement was not presently available. There is no basis in the Contention of the Appellant that PERT Chart was physically handed over as HPPTCL in its affidavit filed on 15.05.2024 has denied that there is no such PERT Chart in the records of HPPTCL and no such PERT Chart was agreed to. The State Commission has also come to a specific finding that the petitioner (Appellant) "has not established that the construction schedule and PERT Chart being referred to forms part of the Connection Agreement."
37. It is further submitted that as per intimation of Grant of Connectivity, the cost of the interconnection facilities including Bays at the substation of the HPPTCL is to be paid for by the Appellant which was sought by the HPPTCL on 01.12.2014, however it was deposited by the Appellant only on 21.03.2018. In terms of the Regulation 5(5) of the HPERC (Promotion of Generation from the Renewable Energy Sources and Terms and Conditions for Tariff Determination) Regulations, 2012, interconnection facilities is to be provided only after 12 months of the deposit of cost by the generator even in case of an existing sub-station, for a new system Page 16 of 34 Judgement in Appeal No. 401 of 2018 even further time. Regarding the contention of the Appellant, that in terms of Regulation 3(2), above Regulations are not applicable, since agreement for the sale of energy has already been signed by the generator, it is submitted that quite apart from the fact that this is not even a ground of challenge, the contention is factually incorrect, as the PPA was executed only on 11.12.2014 and Regulation 3(2) only provides that for PPAs already entered into prior to the Regulations coming into force, these Regulations will not apply. In fact, the PPA executed into by the Appellant itself provides that the 2012 Regulations, shall be applicable. In terms of these Regulations, there is no default by HPPTCL as physical connectivity was granted in May 2018, within one year of cost deposit on 21.03.2018.
38. HPPTCL, before the State Commission, has raised the issue that in the absence of open access, there was no right to use the network for generation and supply of electricity and therefore, there cannot be any injection of power or generation of electricity merely based on connectivity, without open access. The State Commission held that since there was a PPA with HPSEB, open access is not required by the Appellant - generator, as HPSEBL would take open access from the point of injection. It is undisputed that either the generator or the distribution licensee is required to take open access, without which there cannot be any transmission of electricity. In terms of Regulation 8(6) of the HPERC (Grant of Connectivity, Long-term and Medium-term intra-State Open Access and Related Matters) Regulations, 2010, ("HPERC Regulation 2010"), "The grant of connectivity shall not entitle an applicant to interchange any power with the grid unless it obtains long-term open access or medium-term open access or short-term open access." In the present case, HPSEB did not have open access to the entire system, but only to specific lines and systems of HPPTCL. The Addendum to Transmission Service Agreement dated 18.04.2017 between HPPTCL and HPSEB Limited did not include the subject transmission system. It was only by a subsequent Page 17 of 34 Judgement in Appeal No. 401 of 2018 agreement dated 29.05.2018 that the use of the subject transmission system was included as a part of the Transmission Services Agreement with HPSEB. Therefore, there can be no claim for generation and use of the system prior to 29.05.2018. The contention of the Appellant that since HPPTCL has not challenged the impugned order, HPPTCL cannot argue on the issue of open access is misconceived. The Petition of the Appellant - generator was dismissed by the State Commission. This order cannot be challenged by HPPTCL as the decree is in its favor. In an appeal, it is always open to HPPTCL to contend that the impugned Order should be sustained on other grounds, including on issues which the State Commission ought to have decided differently, as held in"Banarsi v Ram Phal"; (2003) 9 SCC 606.
SUBMISSIONS URGED ON BEHALF OF STATE COMMISSION
39. Learned counsel submitted that the Appellant has claimed compensation for the generation loss as their generating station was ready for commissioning but HPPTCL has not commissioned its transmission system, however, the Appellant has neither shown any statutory provision under which it can seek the compensation for the loss of generation of energy or any contractual provision. Clause D of the Connection Agreement specifically provides that a separate agreement would be entered into by the parties for timeline and effect of not adhering to those timelines and the amount of compensation. However, admittedly no such separate mutual agreement was entered into between the Appellant and Respondent No. 2-HPPCL. The PERT chart which has been enclosed by the Appellant along with additional document does not bear any signature of Respondent No. 2; and hence the same cannot be held to be the agreement/PERT chart as envisaged under Clause D of Connection Agreement.
Page 18 of 34Judgement in Appeal No. 401 of 2018
40. It is further submitted that in terms of extant Regulation as well as Clause 2.4 of the connection agreement, the Appellant was to pay the charges for bay etc., however, in spite of demand raised by HPPTCL in 2014 the same was deposited by Appellant in 2018, accordingly the Appellant is not entitled for any compensation. The State Commission after considering the entire record has held that Appellant is not entitled for any compensation, and it does not require any interference by this Tribunal. It is further submitted that Judgements relied upon by the Appellant in"Chamundeshwari Electricity Supply Company Ltd. Vs. Saisudhir Energy (Chitradurga) Pvt. Ltd. & Anr"; 2025 SCC OnLine SC 1816, "Indsil Hydro Power and Manganese Limited Vs. State of Kerala & Ors'; (2020) 16 SCC 276;
"Zile Singh Vs. State of Haryana & Ors. reported in (2004) 8 SCC" "Amaravathi Co-operative Sugar Mills, Krishnapuram, Coimbatore District Vs. D.V. Thirumalaiswamy & Ors. reported in 1970 SCC OnLine Mad 78" , "Kerala State Electricity Board & Anr. Vs. Kurien E. Kalathil & Ors. reported in (2000) 6 SCC 293"), are not applicable in the facts and circumstances of present case.
ANALYSIS AND DISCUSSION
41. Heard the elaborate submission made by Shri T. Srinivasa Murthy, learned Counsel on behalf of the Appellant, Mr. Pradeep Mishra, learned Counsel on behalf of Respondent No 1-HPERC, Mr. Anand k. Ganeshan, learned Counsel on behalf of Respondent No 2-HPPTCL, Mr. Ajay Marwah, learned Counsel on behalf of Respondent No 3 HPSEB. The main issue arising for consideration in the Appeal pertains to Appellant's claim for compensation on account of generation losses caused due to delay by Respondent No 2 - HPPTCL in providing the evacuation facilities from the Appellant's Small Hydro Electric Project of 5MW capacity at Kurtha, located in Chamba Distt., H.P., ("Kurtha SHEP"). It has been contended on behalf of Appellant, that their Kurtha SHEP was ready for commissioning by Page 19 of 34 Judgement in Appeal No. 401 of 2018 Stipulated date of 30.05.2014, however it could be declared successfully commissioned by 31.12.2014 (COD) after grant of interim evacuation arrangement through 33 kV Gharola feeder of Respondent No. 3 under load restrictions, while the 33/220 kV Kurian substation of HPPTCL was commissioned by May 2018, resulting in loss of generation as there were restrictions on evacuation of power from the project under interim arrangement based on grid conditions. In the Impugned Order, the State Commission has framed following four issues for determination:
(A) Whether the Respondent No.1 has defaulted in meeting its obligations under the Connection Agreement executed by it with the petitioner on 12.03.2014? (B) Whether the open access was a pre-requisite for the petitioner, for usage of the system of the Respondent No.1?
(C) Whether the Respondent No. I is liable to pay any compensation to the petitioner, if so, to what extent?
(D) Whether the Respondent No. 2 is liable to pay the compensation as claimed by the petitioner?
42. Issue No A & C were decided against the Appellant on the basis that Connection Agreement dated 12.03.2014 did not provide any specific timelines, and in the agreement it was provided that the parties shall separately agree to the timelines and also the consequences for delay, indemnification, etc. Further, the Appellant could not establish that PERT Chart relied upon by it formed an integral part of the Connection Agreement agreed by the parties; the Appellant defaulted in making timely payment for the cost of bay at Kurian substations to HPPTCL and it was held in the Impugned Order that it is settled law that if both parties fail to discharge their respective obligations, no party can claim against the other party. Issue No. D was also held against the Appellant firstly for the interim arrangement, both Appellant and Respondent No.3- HPSEB has agreed that there shall be no Page 20 of 34 Judgement in Appeal No. 401 of 2018 deemed generation benefit and during the course of hearing, the Appellant itself admitted that no claim lies against HPSEB. Issue No B, was held in favor of Appellant that it was not obligatory on the Appellant to obtain open Access for the power, which was to be purchased by Respondent No.3-HPSEB.
43. It is noted from the Intimation for Grant of Connectivity dated 18.06.2013, issued by Respondent No. 2 - HPPTCL to the Appellant, forming part of Connection Agreement, that the date from which connectivity is granted is indicated as 31.10.2013, as sought by the Appellant in its application and at point (d), (e), (f) and in the Note appended to the said intimation for Grant of Connectivity, other details/requirement details were provided, as reproduced below:
Description Information furnished by STU
Sr.No.
d) Transmission System i) 33 kV S/C line on D/C towers from
required for connectivity Kurth HEP to 33/220 kV sub station
under construction at Karian including
terminal equipment at Karian.
ii) 220 S/C line on D/C towers between
Karian & 220/400 kV Chamera P.S. of
PGCIL
e) Implementing agency for i) 33 kV S/C line on D/C towers from
Transmission system Kurth HEP to 33/220 kV sub station
required for connectivity. under construction at Karian including
terminal equipment at Karian -
Applicant.
ii) 220 S/C line on D/C towers between
Karian & 220/400 kV Chamera P.S.
(PGCIL) - HPPTCL
f) Agencies between whom Applicant and HPPTCL
agreement is to be signed
for implementation of
transmission system
required for connectivity.
"1. Note:-
Applicant who has given intimation for Connectivity to the grid shall have to furnish additional details to STU for signing of "Connection Agreement"
Page 21 of 34Judgement in Appeal No. 401 of 2018 as per format given at FORMAT CONNECTIVITY 4. These details are to be furnished to STU at least 2 (two) years prior to physical interconnection, unless otherwise indicated by STU. The Applicants are, however advised to furnish such details as early as possible for enabling them have lead time for any type of access.
2. ........................................
3. Time period for providing physical interconnection shall be as per terms & conditions stipulated in the procedure for grant of connectivity."
44. As per intimation of grant of connectivity, implementation agency for implementation of terminal bay, for termination of line from Appellant project, at under construction Karian substation is Appellant. It is also clear that though the date of connectivity has been indicated as 31.10.2013, as sought by the Appellant in its application for connectivity, Notes 1 & 3 of the Intimation for Grant of Connectivity clearly stipulate that the details required for physical interconnection shall be given 2 years prior and that the time period for providing physical interconnection shall be as per terms and conditions contained in the procedure for grant of connectivity. The Appellant was, therefore, fully aware that there could be a time gap of two years in providing physical interconnection as data itself is to be provided at least 2 years prior thereto.
45. Subsequent to grant of connectivity, the Connection Agreement was signed between the Appellant and Respondent No. 2- HPPTCL on 12.03.2014 and it is noted from the Format - Connectivity 4, annexed with the connection Agreement that the Appellant has indicated the estimated Completion time of the Project as 31.03.2014 and there was a requirement to enclose the PERT chart, which the State Commission observed that Appellant could not establish that PERT chart referred by the Appellant was enclosed with the Connection Agreement. Before this Tribunal also, the Appellant vide its affidavit dated 11.04.2025, submitted that from records Page 22 of 34 Judgement in Appeal No. 401 of 2018 it is gathered that PERT Chart was physically handed over to HPPTCL on 12.03.2014 on the date of signing of Connection Agreement, however, it was also stated that the person who signed the agreement is not available/not with them any longer. In our view, this conclusively does not establish that the PERT Chart referred now by Appellant was part of Connection Agreement as it does not have acceptance/acknowledgement of HPPTCL and HPPTCL has already claimed that it has not received the PERT chart and the Appellant has not been able to submit the PERT chart, with time line acknowledged by HPPTCL. As such the PERT Chart provides for the time line/ milestone of only Generation Project, with no mention of the time line of interconnecting transmission element conveying acceptance of HPPTCL agreeing to such line, we therefore do not find it necessary to delve any further on this issue and would deliberate on terms and conditions of Connection agreement and applicable Regulations.
46. It is of relevance to quote Recital D, clause 2.4 and 2.5 of Connection Agreement, as reproduced hereunder:
"(D) The parties shall separately take up for implementation of the works on the mutually agreed terms and conditions. The scope of works, time schedule the completion of works, actating the motives for the various milestones to be reacted for completion of works (PERT chart) shall form an appendix to this agreement, and shall form the basis for valuating if the works by the parties is being executed in time penalties for non completion of works in time by one party resulting in financial losses to the other party may be approximately priced as mutual agreement for indemnification of such other against loss incurred in this regard, and form a part of this agreement similar for the regular O&M of the connection equipments owned by the applicant and located in the STUs premises /switchyard, the parties shells separately take up the O&M agreement on mutually agreed terms and condition."
2.4 Agreement to pay Charges for construction of Bays:
Page 23 of 34Judgement in Appeal No. 401 of 2018 The applicant will execute an agreement with STU for the erection of equipment of applicant or intra state transmission licenses/Distribution licence in the substation or inter-State transmission licensee will execute an agreement with STU for construction of bays, if required. For this purpose the applicant shall pay charges to the STU on mutually agreed terms.
2.5 Agreement to pay O&M Charges:
The applicant or inter-State transmission licensee shall pay O&M charges to the STU on mutually agreed terms for the bay equipment of applicant or inter- State transmission licensee being operated & maintained by the STU in their substation. These O&M charges will be governed time to time as per the mutually agreed terms.
47. Recital D of the Connection Agreement, stipulates that the implementation of works shall be taken up separately on mutually agreed terms and conditions, including scope of works, time schedule for completion. Mutually agreed time line shall form the basis, for working out the penalties for non-completion of work by the parties resulting in financial losses to the party and mutual agreement for indemnification of each other against the losses incurred. Thus, from the Recital D, it is inferred that there will be mutual agreement for the time line as well as on the penalties to be agreed upon for the financial losses incurred, if any. However, no documents have been submitted by the Appellant, which indicate mutual agreement reached between Respondent No. 2-HPPTCL and the Appellant for getting the interconnection facilities ready by 31.03.2014, the estimated time of completion of project as indicated in Format - Connectivity 4 or the penalties being worked out between the parties for any financial loss it may cause, due to delay in completion of its activity by other party. Further the Clause 2.4, clearly states that applicant shall execute an agreement with STU for erection of equipment in intra-State licensee/ Distribution licensee, however the Appellant has not furnished any details whether such an agreement was signed by the Appellant with HPPTCL.Page 24 of 34
Judgement in Appeal No. 401 of 2018
48. There is no doubt that Respondent No. 2-HPPTCL, being State Transmission Utility, is statutorily responsible for development of intra-State transmission system in the State and all efforts should be made by them for timely evacuation of power from the generation projects but it is equally important to take cognizance of time required for implementation of the interconnecting transmission facilities. The Grant of Connectivity itself states that though connectivity is granted from 31.12.2013, the provision of physical connectivity shall be as per terms and condition of the procedure for grant of Connectivity. In view thereof, we find merit in the submission advanced on behalf of Respondent No. 2-HPPTCL, that the approval of Connectivity only reserves the quantum for the applicant from the date sought, so that nobody else is granted that capacity, however physical connectivity shall be in terms of the procedure for grant of Connectivity.
49. From the Intimation of Grant of connectivity and the Connection Agreement, though the time line for the Generation project has been indicated as 31.12.2013 and 31.04.2014, in our view it cannot be construed as agreement on the part of Respondent No. 2-HPPTCL to provide interconnection facilities at the matching time line, as same were to be mutually agreed between the parties including penalties for not adhering to the time lines agreed to compensate for the loss, it may accrue to other parties. The Appellant has failed to produce any document which provide agreement of HPPTCL for providing physical interconnection matching with the expected commissioning schedule of generation project. Thus, we find no merit in the Submissions of the Appellant that no separate agreement was required to be signed by them with Respondent No. 2-HPPTCL for implementation of works.
50. It is an undisputed fact that Respondent No. 2-HPPTCL has sought charges for the interconnection facilities vide its letter dated 01.12.2014 and that the Appellant has paid the same only on 15.03.2018 (by way of cheque), and the Page 25 of 34 Judgement in Appeal No. 401 of 2018 explanation furnished by Appellant for this delay is that no purpose would have been served by making the payment in December 2014, as interconnection facilities would not have been provided any time soon thereafter as same was provided only in May 2018. As per Connection agreement, the cost of interconnection facilities, which included two number of bays, is to be borne by the Appellant, for which demand was raised by HPPTCL in December 2014. Learned counsel on behalf of Respondent has contended that in terms of "HPERC (Promotion of Generation from the Renewable Energy Source and Terms and condition for Tariff) Regulations 2012'; ("Tariff Regulations 2012"), the licensee only after receipt of estimated cost of interconnection facilities, may provide facilities within 12 months (or otherwise agreed) at existing substation and mutually agreed time line for new substation. The Appellant has disputed the applicability of these Tariff Regulations 2012, citing Regulation 3(2) ii, as PPA was already signed by them, we do not find it necessary to deliberate on this issue, as the fact remains that there was no mutual agreement between HPPTCL and Appellant with regard to time line for implementation of interconnection facilities and even otherwise HPPTCL has provided interconnection facilities in May 2018, within a period of approximately three months of deposit of cost by the Appellant in March 2018.
51. Cost of interconnection facilities is to be paid by Appellant and in terms of Connection agreement, a period of two years for submitting the details prior to physical interconnection has been stipulated and not even objected by the Appellant at any time. In our view, without even fulfilling the obligation of payment of cost for the bays till March 2018, Appellant is not entitled to claim compensation for the delay in physical interconnection for their Kurtha SHEP project from May 2015, when their project got commissioned. Non-readiness / delay in establishment of interconnecting substation cannot be the basis for non-deposit of the cost, as in terms of connection agreement, cost of interconnection facilities were to be paid by Page 26 of 34 Judgement in Appeal No. 401 of 2018 Appellant. It cannot be construed that Respondent No. 2-HPPTCL shall built the interconnection facilities at its own cost and only upon its readiness, cost of same shall be reimbursement by the Appellant/ Applicant. It is an established practice that for taking up the work for providing interconnection facilities on deposit work basis by Licensee, cost is to be deposited by Applicant in advance. In our view, since it was Appellant's generation Project, evacuation of which was dependent upon STU transmission system, they should have been more vigilant and proactive in depositing the cost and in getting the requisite agreement signed for implementation of interconnection facilities, including mutually agreed time lines and penalties to cover financial loss, if any, due to delay in completion of works as per provision of Recital D, to have binding obligation on the parties.
52. In the Supreme Court Judgement in "Indsil Hydro Power and Manganese Limited vs. State of Kerala and Ors"., (2020) 16 SCC 276) ("Indsil Judgement"), reliance on which has been placed by the Appellant, Indsil Hydro Power & Manganese Ltd. entered into an agreement with Kerala State Electricity Board (KSEB) to set up a hydel project as a captive power project. As per the agreement, Transmission lines from powerhouse to the nearest Grid station (4 Km) was to be constructed by KSEB on behalf of generation project and rest of the transmission line was to be constructed by KSEB at its own cost. The cost of the transmission line was deposited by the Indsil to KSEB. There was delay in construction of the said line from the project, due to which power could not be injected into the KSEB grid and Indsil filed writ petition before High court seeking deemed generation benefit and concessional Tariff, however High court vide its order dated 21.08.2015 held that agreement between the parties did not disclose any specified time line and therefore Indsil is not entitled to deemed generation benefit as well as it was also not entitled for concessional tariff made available to new industries, which has already been availed by Indsil. The said judgement of Page 27 of 34 Judgement in Appeal No. 401 of 2018 the High Court was assailed before the Hon'ble Supreme court. It is profitable to quote relevant paragraph of the referred Supreme Court judgement as reproduced below :
"33. While assessing the merits of the rival contentions, this Court must be cognizant of the fact that the invocation of the power of judicial review under Article 226 of the Constitution of India was in the context of a contract which was entered into between the appellant and KSEB in pursuance of a policy initiative of the Government of Kerala. Evidently, in announcing the policy initiative on 7-12-1990, the State Government intended to encourage the setting up of hydel power projects by private agencies and hence, a slew of concessions came to be provided. The agreement that was entered into between the appellant and KSEB is undoubtedly a matter in the contractual arena. It is now a settled principle of law that the exercise of writ jurisdiction under Article 226 is not excluded in matters pertaining to contract. The States and its agencies are duty- bound to act in a manner which is fair and transparent. The State and its instrumentalities cannot act arbitrarily in dealings with private parties. [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212 : 1991 SCC (L&S) 742; ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553; Noble Resources Ltd. v. State of Orissa, (2006) 10 SCC 236] This must particularly be the governing principle where the State as a measure of encouraging industrialisation invites the participation of private industries to respond to the policy initiative of the State.
35. It was in this background that the agreement stipulated that the date of commissioning would be construed as the date from which the power generated by the units set up by the appellant was fed into KSEB grid. Under Clause 3 of the agreement, the appellant was to furnish within three months a programme for construction and installation towards the completion of the project. Commercial operation was to be achieved within a period of 30 months from that date. Under Clause 9 of the contract, KSEB assumed the obligation to set up the transmission line. Though the contract does not specify the exact length of the transmission line, Clause 9 makes it clear that for a length of 4 km, construction would be at the cost and expense of the appellant while the balance would be constructed by KSEB at its own cost. While a superficial reading of Clause 9 alone is liable to lead to the interpretation that no time was fixed for the completion of the transmission lines, this in our opinion, would not be a correct reading of the contract. In construing a commercial document, the contract must be read and understood in its entirety so as to attribute to it a business meaning which was within the understanding of the contracting parties.
36. Clause 3 postulates that commercial operations would begin within a period of 30 months. The only reasonable construction of the contract would be that the obligations which were to be performed by KSEB, namely, the construction of the transmission line must necessarily be completed within the same period. Otherwise imposing an obligation Page 28 of 34 Judgement in Appeal No. 401 of 2018 upon the appellant to commence commercial operations within 30 months would have no meaning. This would result in a specific term of the contract being rendered redundant which the Court must as a principle of interpretation seek to avoid. Thus, the reasonable construction of the contract would be that the commencement of commercial operations within 30 months postulated that both the appellant and KSEB must perform their respective obligations under the contract within that period so as to adhere to the date of commencing commercial operations. Hence, the High Court was not correct in coming to the conclusion that the contract did not stipulate any timelines for the completion of the work of constructing the transmission line. Such a requirement was implicit in Clause 3 of the agreement and Clause 9 must necessarily be read in that context.
53. The Supreme Court judgment in Indsil pertains to the decision on the Agreement, where the purchasing entity KSEB was to build the line itself and take power from the project, which was given 30 months for commissioning the generation project. There was an obligation on KSEB to purchase power from the generation project, which supreme court held to be establishing reciprocal obligation. The cost of 4 km transmission line, which was to be built on behalf of generation project was also deposited by Indsil when sought by KSEB. In the said judgement, the claim for compensation by way of deemed generation was not allowed and matter was remanded for having fresh consideration by Government of Kerala and KSEB, on the ground that the issue involved policy considerations. Relevant paragraph of the judgement reproduced hereinbelow:
46. To facilitate this exercise, we are of the view that it would be appropriate if both the State Government and KSEB together re-visit the entire matter afresh and take an appropriate decision in accordance with law preferably within a period of four months from the receipt of a certified copy of this order. The appellant would be at liberty to supplement its earlier representations with whatever, in addition, it may wish to submit before the State Government within a period of one month of the receipt of a certified copy of this order.Page 29 of 34
Judgement in Appeal No. 401 of 2018
47. We would expect that the State Government would now re-assess the matter in a fair and proper perspective so that the dispute can attain finality with the ultimate decision.
54. From the above, it is clear that facts of the present case are different; HPPTCL is not under an obligation to purchase the power from the Appellant from a particular date to establish reciprocal obligation, as well as cost demanded by HPPTCL for interconnection facilities was not deposited by the Appellant in time. HPPTCL was acting in the capacity of Intra State Transmission utility and was developing the referred substation for overall development of the Grid and Grid connectivity was provided in terms of extant regulations and such development of referred substation was not being undertaken under any bilateral arrangement between HPPTCL and Appellant. The time line provided in the agreement in "Indsil Judgement" for completion of generation project was 30 months, and this was considered reasonable time for establishing associated transmission line, even when no time line was indicated in the Agreement. In the present case, the Appellant has indicated expected completion time of its generation project as 31.12.2013 in its application for Grant of Connectivity, while in the connection agreement, signed on 12.03.2014 same was indicated as 31.03.2014, which got further revised to 30.05.2014 in the PPA signed by the Appellant with Respondent No. 3-HPSEB. While, no doubt STU is responsible for development of transmission system within the State, however, by no stretch of imagination, STU can be obligated to provide interconnection facilities, which also involve construction of two 33 kV bays for the Appellant on deposit work basis, in less than one month from the date of signing of Connection Agreement or it can be considered reasonable time. As already deliberated above, no time line was mutually agreed between the Appellant and Respondent No. 2-HPPTCL, in terms of Connection agreement, which itself stipulates the time period for giving details are to be furnished two years Page 30 of 34 Judgement in Appeal No. 401 of 2018 prior to physical interconnection; thus, the reliance placed by the Appellant on the Indsil Judgement is misplaced and does not advance its case.
55. The Appellant has placed reliance on Section 73 and 46 of the Indian Contract Act, 1872, in support of its claim for compensation on the alleged ground of breach of contract. Section 73 of contract Act 1872 relates to entitlement of a party who suffers by breach of an agreement and Section 46 relates to a reasonable time for performance of promise, where no application is to be made and no time is specified. The referred sections are reproduced below:
46. Time for performance of promise, where no application is to be made and no time is specified - Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.
73. Compensation for loss or damage caused by breach of contract -
When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach
56. As deliberated in detail above, no such agreement for time line was entered into between Appellant and HPPTCL and furthermore in terms of Grant of connectivity and the connection agreement, the cost of interconnection facilities was to be borne by the Appellant. It is an admitted fact that though the Respondent No. 2-HPPTCL vide its letter dated 01.12.2014, raised the demand for cost of such interconnection facilities and same was deposited by Appellant only on 15.03.2018. Therefore, in our view, in the absence of any agreement for the time line for the Page 31 of 34 Judgement in Appeal No. 401 of 2018 interconnection facilities and non-fulfillment of obligation by the Appellant, there is no breach of agreement by HPPTCL and accordingly there is no application of section 46 and Section 73 of Contract Act 1872. With regard to reasonable time line for implementation of interconnection facilities, it is observed that same has been completed by HPPTCL in May 2018 and physical connection provided in June 2018, within 3 months from the time of deposit of cost by Appellant. In view of above deliberations, the reliance placed by the Appellant on the judgements in "Kerala SEB v. Kurien E. Kalathil, (2000) 6 SCC 293 and "Special Officer, Amaravati Co-operative Sugar Mills, Krishnapuram, Coimbatore District v. D.V. Thirumalaiswamy & Ors., 1970 SCC OnLine Mad 78 is misplaced and the said decisions are inapplicable to the facts of the present case
57. Learned counsel for the Appellant has contended for the retrospective application of 2021 Amendments to the Connectivity Regulations ( " Connectivity Regulation 2021"), citing Regulation 8(5) to establish Appellants right to claim compensation, as Connection agreement itself will construe to have provision for the consequences of delay in meeting the timelines by the respective parties to the agreement. Regulations are dynamic in nature and continue to evolve in response to changing circumstances, policy objectives, and legislative intent. It is a well-established principle of statutory interpretation that regulations, unless expressly stated to the contrary, are intended to operate prospectively. It has been consistently held that retrospective application of subordinate legislation is impermissible in the absence of clear legislative mandate, as it would offend the rule of law and the doctrine of fairness. The evolving nature of regulations reflects the legislature's intent to address future conduct and circumstances, not to unsettle rights or obligations already crystallized. It is settled proposition of law that amendments to statutes or regulations, unless expressly retrospective, are always prospective. (Gujrat Urja Vikas Nigam Limited v. Renew Wind Energy (Rajkot) Private Limited, 2023 SCC OnLine SC 411; Green Infra Wind Solutions Ltd. v.
Page 32 of 34Judgement in Appeal No. 401 of 2018 A.P. ERC, 2024 SCC OnLine APTEL 135). In the judgment "Zile Singh v. State of Haryana, (2004) 8 SCC 1), the reliance on which has been placed by the appellant, it is stated that the intrinsic evidence may be available to show that the amendment was necessarily intended to have retrospective effect, however, in the present case, the Connectivity Regulations, 2021 specifically notes that "these Regulations shall come into force from the date of their publication in the Rajpatra, Himachal Pradesh" and therefore cannot be considered having retrospective application/intention, and accordingly, the judgment in Zile Singh has no application to the facts of the present case. Nevertheless, without further deliberating the retrospective application of Connectivity Regulation 2021, these Regulations specifies obligation of the licensee for completion of interconnection facilities only after receipt of the estimated cost from the Applicant under sub-regulation 5, as reproduced hereunder:
" (III) for sub-regulation (5), the following sub-regulation (5), shall be substituted, namely:-
(5) The applicant or the intra-State transmission licensee or a distribution licensee, as the case may be, shall, within 30 days of the grant of connectivity, sign a connection agreement with the State Transmission Utility or the intra-
State transmission/distribution licensee owning the sub-station or the electric line, as identified by the nodal agency where connectivity is being granted. Such agreement shall also incorporate the detailed provisions relating to, but not limited to, the following, namely-
................
(d) completion of the interconnection facilities, after receipt of the estimated cost thereof, by the licensee owning the substation/line where the dedicated line is to be connected;"
58. Viewed from any angle, it is not justified to mulct the liability of deemed generation on HPPTCL, even when the Appellant has not fulfilled its obligation under the Connection Agreement and time line for completion of interconnection activities has not been mutually agreed to.
Page 33 of 34Judgement in Appeal No. 401 of 2018 Considering the above deliberation, we are of the considered view that the State Commission has made no error with regard to prudence check of the facts in the present case and accordingly the judgement of this Tribunal in "Greenko Budhil Hydro Power Private Limited v. UERC, Appeal No. 100 of 2017 ("Greenko Judgement"), is misplaced and does not advance the Appellant's case.
59. Further, in view of the foregoing deliberations and observations, it is unnecessary for us to examine Issue C, which has been decided in favour of the Appellant, being disputed by Respondent No. 2 - HPPTCL as even if, hypothetically, Issue C were to be decided against the Appellant, such a finding would not in any manner affect the conclusions recorded in the preceding paragraphs.
ORDER For the foregoing reasons as stated above, we do not find any error in the Impugned order of HPERC necessitating interference and Impugned Order is accordingly upheld. The Appeal stands dismissed.
All pending IAs, if any, are disposed off in the above terms.
PRONOUNCED IN THE OPEN COURT ON THIS 06th DAY OF JANUARY, 2026.
(Virender Bhat) (Seema Gupta)
Judicial Member Technical Member (Electricity)
REPORTABLE / NON-REPORTABLE
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